A Mad Tea-Party

           Lets say a public corporation had 324.9 million shares of common stock outstanding at year-end 2011, and 257.6 million were Class A shares issued to public investors and 67.3 million were Class B shares held by company insiders, and Class A had one vote per share and Class B had 10 votes per share, so that company insiders held 72% of the voting control even though they had sold what then amounted to 79% of the ownership interest to their outside stockholders.


           Furthermore, lets say management wanted to rob these Class A suckers blind with an egregious stock option swindle, and to do so, just announced a brand new issue of Class C Common Stock, and said they were distributing one Class C share to each Class A and Class B share.  Now if you’ll excuse us for pulling a number out of the blue, lets dare to hypothesize that said lowlifes were going to start paying themselves and their cronies equity compensation packages totaling 20% of Class C shares every year, and wanted to do it this way so the founders and them could loot 10% of the total wealth invested in the outfit annually, and the founders wouldn’t have to spend a dime of company cash retiring any equity compensation shares in order to maintain their voting control, keeping the founders and presumably their descendants too, in position to rip off public investors until the end of time, unless, of course, the robbers ran out of descendants first.


           Why don’t we take a look at the proformas?


           Adjusted for the announced 1 for 1 non-voting share stock manipulation, the December 31, 2011 capital accounts shown in the 2012 Form 10-K would break down like this, "us" being you and I and the rest of the suckers, and "them" being the crooks:


                                      Common Stock Outstanding
                                       Year-End 2011 (in Millions)
                                          Total      Non-
                   Ownershiip    Shares   Voting    Voting
Us:                    79%          515.2     257.6     257.6
Them:               21             134.6      67.3        67.3
Total               100%          649.8    324,9      324.9


           Paying their corporate elite and corporate elite wannabes 20% of the non-voting class as equity compensation each and every single year, after a decade the swindle would pump that issue up to more than two billion, eleven million shares, and change, as follows:


                   Non-Voting Stock
                Issued      Outstanding
              Annually      on Dec 31
2011        324.9           324.9
2012          65.0           389.9
2013          78.0           467.9
2014          93.6           561.4
2015        112.3           673.7
2016        134.7           808.5
2017        161.7           970.1
2018        194.0        1,164.2
2019        232.8        1,397.0
2020        279.4        1,676.4
2021        335.3        2,011.7


           Since all the non-voting shares issued from 2012 to 2021 would go to corporate elites and corporate elite wannabes, the ownership change, or looted public savings, would be dramatic over the decade.  Management can, and typically does, obscure the more egregious “stock option” atrocities committed inside our lawless financial system with merger activity, throwing enough new shares from that source into the mix to pass off public savings looted by executive compensation packages as de minimus.  It’s easy for perps in various criminal enterprises to seek each other out, jointly burying their “stock option” shenanigans inside larger reported numbers with two strokes of a pen and several hundred corporation lawyers.


           This hypothetical example is so blatantly immoral, management would probably be driven to mess further with the Class C currency they've monetized, as in reverse stock splits down the road, or a whole new Class D creation, the specific purpose of which can only befuddle a lawful mind until such time as that Class D is structured and at large.


           Without cooking the books through merger deals, or retiring new shares via stock buy-backs, or whatever, the December 31, 2021 capital accounts here would look like the following, so we wouldn’t expect them to.  Clearly, mergers (and maybe some buy-backs) would have to shroud these numbers in totally inadequate disclosure.   Note how public wealth, as represented by percentage ownership in the first and third tables, would be plundered to the point of utter devastation, as pilfering 10% of it for 10 years is wont to do.


                                         Common Stock Outstanding
                                          Year-End 2021 (in Millions)
                                            Total         Non-
                   Ownershiip      Shares      Voting     Voting
Us:                    22%            515.2        257.6      257.6
Them:               78            1,821.4     1,754.1        67.3
Total               100%         2,336.6     2,011.7      324.9


           Beneath all the malfeasance, of course, voting control would remain unchanged.  Since this particular evil would be unleashed through non-voting Class C shares, the voting Class A and Class B share tallies would stay the same:

Us:         28%   (257.6 million votes)
Them:    72      (673 million votes)
Total     100%  (930.6 million votes)




           “Then you should say what you mean,” the March Hare went on.
           “I do,” Alice hastily replied;  “at least – at least I mean what I say – that’s the same thing, you know.”
           “Not the same thing a bit,” said the Hatter.
                              - Lewis Carroll, Alice’s Adventures in Wonderland

Out-of-the-Way Things

           “Why did you chop us up into little bits with an axe and scatter them across the state, Honey?”


           Brunhilda had no answer.  Brunhilda never had an answer for that one.


           Humans go to Heavenly Paradise whether they want to or not.  If you’ve axed your mom and dad real good and scattered the bits atop every landfill in a number of greater metropolitan areas, all the landfills you could google anyway, and your mom and dad head on up to Heavenly Paradise after the transgression(s), you probably don’t want to go there too, and that’s the way it was with Brunhilda Toberfest.


           Heavenly Paradise is a place where humans worship God because He gives them free food, and God knows this and makes them eat His free food with relatives.  Everybody.  Every meal.  No matter what’s going on with them and the loved ones, everybody eats every meal in Heavenly Paradise with relatives.


           Some of the more entertaining dinner conversations get broadcast over the Heavenly Paradise public address system, which is how small investors came to be listening to Brunhilda Toberfest’s mom that day and heard her history-making query:  “why did you cut us up into little bits and scatter them across the state, Honey?”


           Those words started what would soon become the Occupy Free Food Movement, and ….


           “Why did you cut our pro-rata ownership interests into little bits with “stock options” and scatter them among your management-level employees, A$$h%le” became that movement’s battle cry.


           “Stock options” loot tiny amounts of investor savings each annum over long numbers of annums, kicking in the miracle of compounding interest, and, after several decades, transfer the entire amount of starting investor wealth to the thieving looters, who keep paying politicians to let them pull this swindle off.  Media moguls, looters too, keep it all hush-hush, and the math-challenged investing public is too math-challenged to figure out that they’re losing everything they started with and only get to keep some of the growth, if any, in their common stock investments when they invest in stock markets rigged by the modern billionaire.  These felonious activities started in 1981 after Washington got bribed enough to make them happen.


           “Why did you cut our pro-rata ownership interests into little bits and scatter them among your management-level employees, A$$h%le”  U. S. Ucker asks the recently deceased CEO of General Pursuits Co., Inc. three times a day every day of his eternal rest now that God is letting small investors eat with CEOs instead of relatives owing to the Occupy demonstration that’s been clogging up things all the way out to Peter’s Pearly Gate since September 18, 2011.


           U. S. Ucker generally kicks the CEO in the n#ts too, but since souls don’t have any n#ts up in Heavenly Paradise, and that includes your male souls as well, it’s a really silly thing for U. S. to do.




           “For, you see, so many out-of-the-way things had happened lately, that Alice had begun to think that very few things indeed were really impossible.”  - Lewis Carroll, Alice's Adventures in Wonderland

Curiouser and Curiouser

           According to its 2011 Form 10-K, Google had 324.9 million total common shares outstanding at the end of last year, comprised of 257.6 million Class A shares, which are publicly held, and 67.3 million Class B shares issued to company insiders, its three founders mostly, according to a Street source.


           Now - as MacDougal Post readers know - corporate elites have been skimming investor savings into their big fat overstuffed pockets with “stock option” swindles and the like since 1981, and due, at least in part, to the compensation packages at Google, instead of that 324.9 million total above, 327.1 million average diluted shares were used to calculate 2011 fully diluted earnings per share (for some reason(s) Wall Street analysts seldom choose to share with you and me in any of the countless reports they spit out).


           Anyway, Class A owners (you, me, and the rest of the suckers out there) get 1 vote per share, and Class B (them) 10, so voting control of Google as of December 31, 2011 broke down as follows:


                    Us:         28%   (257.6 million votes)
                    Them:     72     (673 million votes)
                    Total     100%  (930.6 million votes)


           Ownership, however, looked like this:


                    Us:          79%  (257.6 million shares)
                    Them:      21    (67.3 million shares)
                    Total     100%  (324.9 million shares)


           On April 12, Google management announced they would create a third class of stock, non-voting this time, named Class C, and issue one new Class C share for each Class A and Class B share held.  This won’t change the percentages in the previous tables, so we’re not going to bother recalculating the parentheticals for you.


           So why non-voting?


           Well, over time the mounting total of new shares issued to non-founding employees in stock option swindles would threaten voting control unless management bought the stock back with company cash, money which would otherwise finance growth.  American corporations facing that problem generally just go ahead and screw their public shareholders by doing buy-backs anyway.  If Google management now chooses to compensate non-founding employees with non-voting stock, they won’t have to retire those employee “stock option” issuances by dipping into that cash, freeing the funds to help finance their future, the way things used to be before 1981.  Possibly equally important, depending on how much merger and acquisition (M & A) activity the years ahead bring, shares used for M & A transactions also chip away at control, (though any cash spent there is, in fact, channeled into growth), and non-voting stock issued in such pursuits would solve that part of the control problem at Google as well.


           On the other hand, that flow of cash has proven to be a limiting factor at U.S. corporations.  Past stock option swindles have typically been held to the number of shares companies can retire with generated cash, specifically that amount management has chosen to divert to itself from shareholder savings.  If this non-voting thing takes, and insiders seize on it as an opportunity to balloon “stock option” swindles, our guess is, the practical limitation on the magnitude of their looting no longer holds.


           Pilfering relatively small numbers of shares each year, it took the 1% two or three decades to loot our entire 1980 savings with their “stock option” racket, basically transferring a huge part of what we would’ve been leaving to our children into the thieving b$st$rd$’ hands.  With non-voting shares, looks to us like the crooks have come up with a way to do that quicker.  Much quicker, in fact.


           Maybe Google doesn’t have that on their minds.  Who knows?  But surely they’re opening the door.  Like the “stock option” itself, this is too sweet a swindle for the MBA mind to turn away from, especially the element who enroll with larceny on their minds, and with the curtain of inadequate disclosure pulled down snugly around executive compensation schemes these days, the risk of investing in U.S. equities has just been raised to exasperating levels.


           Any reason we may have had to stray from American icons may have just been trumped by Thursday’s announcement, one The Post deems outrageously hostile to an investment community already reeling from more than three decades of egregious stock option racketeering.


           “We have never declared or paid any cash dividend on our common stock. We intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future.”   – Google 2011 Form 10-K

Whose Savings Did He Loot?

http://economy.money.cnn.com/2012/04/06/what-we-dont-know-about-romneys-money/?iid=H_E_News